Updated from 10:48 a.m. EDT
Crude prices plummeted to a seven-month low Tuesday as a proposed OPEC production cut fell apart amid Saudi Arabia's apparent refusal to go along with it.
Saudi Aramco, the kingdom's largest oil company, will keep shipping to Asian refiners next month and not curb them to meet an informal OPEC agreement to trim exports. OPEC President Edmund Daukoru sent a letter Monday to members, asking for a daily reduction of 1 million barrels, or 3.4%, beginning Nov. 1.
He gave member nations one day to respond.
Light, sweet crude plunged $1.44 to settle at $59.52 a barrel on Nymex. Oil prices have fallen 24% since mid-July when traders fretted fighting between Hezbollah and Israel would impact crude exports from the Middle East.
Heating oil and unleaded gasoline each gained 1 cent to $1.68 a gallon and $1.46 a gallon, respectively. Natural gas rose 9 cents to $6.46 per million British thermal units on colder weather in the Midwest and likely higher heating demand. Still, the fuel has tumbled 60% since last December.
Although some oil exporters have informally agreed to the cut, others are still discussing whether to trim from 700,000 barrels to 1 million barrels per day. The group isn't expected to hold an emergency session ahead of its planned Dec. 14 meeting.
Last month, the cartel agreed to keep daily production the same at 28 million barrels to help reduce high oil prices. Now, however, prices have fallen to the point where the group, which controls 40% of the world's crude, wants them to rise.
Production from Prudhoe Bay is expected to resume late Tuesday after heavy rain and wind knocked out power.
is now pumping at a rate of about 20,000 barrels per day.
The seizure of a
Royal Dutch Shell
oil facility in Nigeria trimmed the company's daily production by 12,000 barrels. Another facility that produces 18,000 barrels of crude per day was back in operation after being taken over by rebels.
Hefty fuel supplies, little hurricane activity in the Gulf of Mexico and lessening worry about Iran have pushed down energy prices over the past few weeks. Supplies of crude, distillates, natural gas and gasoline are 7% to 18% above the same period last year.
Those factors plus the prospect of a warmer-than-usual winter prompted Merrill Lynch to lower its forecast for oil prices in the fourth quarter from $67.50 to $61. Prices will likely remain choppy until OPEC resolves its indecision over production limits.
Plentiful inventories and low prices will help American homeowners pay less to heat their homes with natural gas this winter, the U.S. Energy Department said in its monthly outlook. On average, consumers will pay 13% less, or $119, on natural gas this year. More than half of all U.S. homeowners use the fuel to heat their homes.
Homeowners using heating oil and electricity should expect to pay 6% and 7% more this winter.
Excess supplies will come in handy this winter since the National Oceanic Atmospheric Administration predicts temperatures will be 5.9% colder than last year.
Energy shares were trading 1.7% higher on the Amex Oil Index, with
leading advances by at least 3%.
, the largest publicly traded energy company, was gaining 1.2% to $67.33.